Thursday, October 9, 2008

Rise in insurance costs dwarfs wage increases in Tenn.

Health-care premiums for families rose at five times the growth in wages of Tennessee workers over the last seven years, a new report released Wednesday showed.

"This is a story of people paying more and more and receiving less," said Ron Pollack, executive director with Families USA, the nonprofit group behind the report that advocates for health care for everyone.

The report showed median earnings of Tennessee workers rose 12.1 percent, to $25,639, between 2000 and 2007. Meanwhile, premiums for family health coverage offered through the workplace rose 61.9 percent, from $6,550 to $10,606.

With premiums, co-pays, deductibles and other out-of-pocket costs rising, health costs are the fastest growing expense in U.S. households. For middle-income households, they now exceed 17 percent of disposable income, according to a separate tracking by the Deloitte Center for Health Solutions.

The recent economic downturn only worsens the situation at a time when the state plans new cuts in its health insurance program for the poor, advocates for the uninsured said. "We're going in the wrong direction," said Tony Garr, executive director for the Tennessee Health Care Campaign, citing new census data showing Tennessee bucked a nationwide decline in ranks of the uninsured.

Among findings in Families USA's report, employers also saw a rise in their portion of annual premiums. Their contribution toward family coverage rose 58.2 percent to $7,679 and they paid 51.5 percent more toward individual health coverage.

"What that means is that workers are experiencing a triple whammy," Pollack said in a conference call Wednesday. "Because employers' portion are rising substantially, that has the impact of depressing wages, which also hurts the worker."

Workers, meanwhile, saw their portion of annual premiums rise 72.5 percent to $2,927 for family coverage and 69.1 percent to $791 for individual coverage.

Jim Murrell, who runs a small business in Franklin, said that on average his two employees who receive health insurance benefits pay 7 percent of their wages while the company contributes another 7 percent toward those benefits.

That's even after JMG Freight Group switched from a provider organization plan to a high-deductible health plan with a health savings as a way to reduce overall health insurance costs. Under that high-deductible plan, Murrell pays nearly $10,000 a year in premiums for a policy with a $5,000 deductible for coverage for his family. His family's premiums would have been about $15,000 with a $2,000 family deductible under a traditional PPO plan, he said.

The Families USA report is based on data from the U.S. Census Bureau, the U.S. Department of Labor, and the U.S. Department of Health and Human Services. Roughly 16.1 percent of the state's non-elderly population, about 841,000 people under age 65, is uninsured, according to census figures.

Benefits too small

Garr said that programs such as CoverTN that aim to improve access to insurance coverage haven't proven as successful because they offer minimal benefits.

About 16,020 people are enrolled in the program for employees of small businesses, the self-employed and people whose employers don't offer health insurance or are between jobs. Joe Burchfield, a CoverTN spokesman, cited recent enhancements to the program's benefits, including additional coverage for doctor visits, as ways that the state is addressing the needs of the uninsured.